For this Tutorial, we will use Barbaro Free Font from Iv·n N˙Òez. 1 - In Illustrator, create a “New Document”.
2 - Select the “Rectangle Tool” (M) and draw a rectangle covering the entire document. Choose white as “Fill” color and no “Stroke”. Then lock the rectangle by first clicking on the small arrow to the left of your layer thumbnail to show its contents and then selecting the “Rectangle” and clicking just right of the little eye icon to bring out the lock.
3 - Select the “Type Tool” (T), choose your font and type your text. Use black as “Fill” color. Then go to Object > Expand, make sure both checkboxes are selected and click “OK”.
4 - Duplicate your text by dragging the thumbnail to the “Create New Layer” button at the bottom of the “Layers” Panel.
5 - Hide the bottom text and select the one on top then go to the “Pathfinder” Panel and choose “Add”, click on the top-right menu of the Panel and select, “Make Compound Shape”. Then, click the “Expand” button. You will notice that in the “Layers” Panel your text is named “Compound Path”.
6 - Unlock your “Rectangle” and duplicate it. Select the duplicate and the “Compound Path” text (hold the “Shift” key and click on each layer) and in the “Pathfinder” Panel choose “Expand Compound Shape” (Exclude).
7 - Make sure you are still selecting the new group layer and change the “Fill” color to a light shade of gray (About 10%). Then “Ungroup” it (Shift + Command/Control + G), select (while holding the “Shift” key) the center portions of the letters and delete them.
8 - Make your other text layer visible again and “Ungroup” it (Shift + Command/Control + G). Select the “Compound Path” Layer and place it under the text but on top of the rectangle.
9 - Select one of your letters and the “Free Transform Tool” (E). Select the middle-right white dot on the grid and drag upwards and slightly leftwards to distort the letter. Repeat this with the rest of the text. Use the “Selection Tool” (V) to select the letter and then the “Free Transform Tool” (E) to distort it.
10 - Select the “Rectangle” and change the “Fill” color to a medium grey (About 30%). Lock the “Compound Path” and “Rectangle” Layers and select all your text. Change the “Fill” to “Gradient”. Make the gradient “Linear”, with a 10° Angle and use white and 30% Grey as colors. Then click the “Reverse Gradient” button.
11 - Duplicate the “Rectangle” Layer, unlock it and in the “Fill” Panel click on the small menu on the upper-right corner, navigate to Open Swatch Library > Patterns > Basic Graphics > Basic Graphics_Lines and choose “Undulating Fine Lines”, then go to the “Transparency” Panel and lower the “Opacity” to 10%.
12 - Make sure your three bottom layers are locked and select the rest then go to the “Pathfinder” Panel and click “Merge” (Add). Duplicate the layer, select it and in the “Pathfinder” Panel click on the top-right menu of the Panel and select, “Make Compound Shape”. Then, click the “Expand” button.
13 - Drag that layer under the “Group” text and in the “Appearance” Panel click on the “Add New Effect” button, go to Stylize > Drop Shadow and apply the following values:
14 - Unlock the background compound shape layer (the third one counting from the bottom up) and change the “Fill” to a “Gradient” with the same color used before but use a 90° Angle.
15 - Select your text, ungroup it and selecting each letter with the “Selection Tool” (V) first and then with the “Gradient” Tool (G) fix them individually to make the shades more realistic. You can also select the background compound shape layer (Step 15) and play around with the gradient angle and position.